Surviving the "financial crisis"

[fccool]

I see a lot of hype now going on by bloggers and "economists" about the looming financial problem that USA and the world is facing. Not only there's much misunderstanding, but there are ridiculous amount of misplaced fears and "what are we going to do now" panic questions. I'd like to lay a couple points out and try to re-assure what the finantial panic means for the ordinary person who is not involved in the wall street profiteering.

1) The current financial problem is SOLELY due to the fact that all of the banks in the USA are fractional reserve banks. If that was not the case, they would think really hard before landing out the money they had to finance the McMantions of people who can't pay for these.

Right now, the banking system is no different from people that pay of one set of debts by taking out another loan or credit card. That's called debt surfing. That's what banks do. They land out the money that are not theirs, and then surf the remainder to sutisfy the needs of the customers. While Shane is right, and it is not going to change due to generation Y already so used to this idea... it's nevertheless the primary reason behind the financial crises.

People taking out loans, the banks packaging the IOUs and selling these to wall street investors... and then a speculative market of 500+ TRILLON grows based on nothing but debt and ability of the borrowers to pay back... which is obvious to any sane person that there are no 500+ TRILLION on this planet to resolve this derivative (derived from debt) market.

2) This will be a different situation than during the Great Depression, and there are a couple reasons for that.

The Suburbia was almost non-existent during the GD, thus people still were depended on small communities around them. Every one had local grocer which got the goods from local farmers. There was no 1000 miles Salads from California phenomenon's. People still were canning goods for the winter, which is a lost art now. People were sewing their own clothing in many cases

Today, people live in large cities, and for the most part depend on Chinese to cloth, entertain, and supply them with trinkets. If that process gets disrupted, many would not know what to do, anymore... because their job is running around of the diminishing musical chairs of today's economy. Many "luxury" jobs will disappear, and these should.

3) Since even 60s some economists were warning that such system would not last long. The reason that it even lasted for some odd 50+ some years, is because foreigners believed that the Dollar was worth something. That belief gave USA an unlimited credit card to go by. The moment that external credit dwindles and home markets will be flooded with all of the extra digits... there is a great potential for hyperinflation.

4) The crisis is in the minds of people, because there is no crisis really if you think hard about it. If people really chose to, they could dump the current financial system in their communities and switch back to the local community support one, that worked quite well in 1800s. Sure people did not have all the luxuries of debt based living, but situations such as these would not be of any threat. I think the sooner the churches realize that and give up worrying about their bank accounts... the better. Then people can start investing in local communities for their insurance, instead investing into a bogus corporation such as AIG that eventually mismanages money because it's not it's own.

5) I think we should take "In God We Trust" off our money, because it's obvious that it's "In our Money we Trust" . And if we don't, then panic sets in.

There's nothing to worry about if we follow God's principles of wealth management. Invest in local communities, and that way you have a circle of immediate interdependence. Farming communities are great for that. Cities, and suburbia are "everyone for themselves now" cases. I think we need to start speaking about immediate down-up solutions, istead of waiting for Government or Fed to print more money, because that's the only thing that they can do at this point , and in fact this "solution" transfers the wealth from your bank account into the account of the irresponsible institution that Fed is financing,and that happens by mechanism of inflation.

I'd like to hear your thoughts on how we can come closer as church community in times like these.

[carolaa]

I pretty much agree with your thoughts. I agree debt surfing is a big deal, but I also think the government's example is another big deal. They have run the national debt up to trillions, more than anyone can fathom, giving us the impression that we are a rich nation with limitless resources. What is there to make the average person (who hasn't read much history) think they cannot do the same thing?